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Coronavirus Relief Bill “Phase 3”

This is a summary of Phase 3 of the bill BEFORE it was published. Read more on the passed bill and what it means for your business here.


There is a lot going around the media and it is hard to stay up to date. One of the hardest things as a business owner is getting access to good information. It is our intent as advisors to help our clients get access to this information and help them make informed decisions that help them improve their lives and businesses.

Phase 1 or “Coronavirus Preparedness and Response Supplemental Appropriations Act” (H.R. 6074) provided $8.3 billion to fund acquisition of medical supplies and develop treatments and vaccines. It passed Congress with bipartisan support in both chambers and was signed into law. Phase 2 or “Families First Coronavirus Response Act” (H.R. 6201) ensured the availability of free coronavirus testing, in addition to providing for paid leave under certain circumstances, and expanding food aid and unemployment insurance benefits during the outbreak. See more on this bill at the end of the article as it is very crucial to understand as a small business owner.

We are currently working on ‘phase 3’ of the Coronavirus Relief Bill. The intent of phase 3 is to provide economic relief from COVID-19 to individuals, families, small businesses, and hard-hit sectors of the U.S. economy. While the current version of this bill was defeated yesterday (3/22/2020) by Senate democrats, they are still debating what will happen and if a new bill will be proposed.

However, here is what was contained in the most recent version of this bill:


  • This section would make available $299.4 billion in loan guarantees & loan subsidies through the Small Business Administration’s (SBA) 7(a) loan program for businesses with 500 or fewer employees. Loans could be used for payroll support, paid sick or medical leave, employee salaries, mortgage payments, and other debt obligations. Both borrower & lender fees would be waived for 7(a) loans, and the maximum amount would be increased to $10 million through December 31, 2020.
  • Existing & new SBA lenders would be able to determine borrower eligibility & creditworthiness without going through the SBA’s typical channels. Instead of being required to determine repayment ability (which isn’t possible during the pandemic), lenders would simply be required to determine whether a borrower was operational on March 1, 2020, and had employees for whom it paid salaries & payroll taxes. The government guarantee of 7(a) loans would be increased to 100% through the end of 2020, at which point the guarantee would return to 75% for loans over $150,000 and 85% for loans less than or equal to $150,000. The complete deferment of 7(a) loan payments would be permitted for up to one year, and the SBA would provide guidance to lenders about the deferment process within 30 days.
  • Loan forgiveness would be available to borrowers in an amount equal to the payroll costs and costs related to debt obligations paid between March 1, 2020, and June 30, 2020. The amount of the loan eligible for forgiveness would be reduced proportionally by the number of employees laid off during this period relative to the borrower’s prior employment levels. Qualified payroll costs would exclude any compensation for employees in excess of $100,000 in annualized compensation, and qualified sick leave & qualified family leave wages as enacted by the Families First Coronavirus Response Act. Loan forgiveness amounts wouldn’t be included in a business’s taxable income. Lenders would verify payroll costs and payments made on debt obligations.
  • $75 billion in funding for hospitals and other healthcare providers.
  • All diagnostic testing for coronavirus (COVID-19) would be free of charge to the patient.



Individuals & Families: This section would provide recovery checks for up to $1,200 for individual taxpayers, and up to $2,400 for married couples filing a joint return. Those amounts would increase by $500 for each child. Taxpayers with little or no income tax liability, but at least $2,500 of qualifying income (such as earned income, Social Security retirement benefits, and veterans’ compensation or pension benefits), would receive a recovery check of at least $600.

Recovery checks would be reduced for higher income taxpayers and begin phasing out at $75,000 in adjusted gross income (AGI) for individual taxpayers & $150,000 AGI for joint filers. The recovery check amount is reduced by $5 for each $100 a taxpayer’s income exceeds the phase-out threshold; and it would phase out entirely for single taxpayers with incomes over $99,000 & joint filers with AGI exceeding $198,000. The Internal Revenue Service (AGI) would base these AGI amounts on the taxpayer’s 2018 tax return.

The April 15th tax filing date would be extended to July 15th to give individuals more time to file their tax returns given the limitations caused by the coronavirus pandemic. All taxpayers would be able to postpone estimated tax payments until October 15, 2020, and there would be no cap on the amount of tax payments that can be postponed to increase the cash available to people experiencing shortfalls during the COVID-19 emergency.

Similar to special retirement used previously in disaster relief, the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts would be waived for coronavirus-related purposes. Income from these distributions would be subject to tax over three years, and the taxpayer could recontribute the funds to an eligible retirement plan within three years without regard to that year’s contribution cap. Coronavirus-related distributions would include those:

  • Made to an individual diagnosed with COVID-19;
  • Whose spouse or dependent is diagnosed with COVID-19,
  • Who experience adverse financial consequences as a result of being quarantined, furloughed, laid off, have work hours reduced, are unable to work due to lack of child care, the closing or reduced hours of a business owned or operated by the individual, or other factors as determined by the Treasury Secretary.

To encourage Americans to contribute to churches & charitable organizations in 2020, they would be permitted to deduct up to $300 of cash contributions “above the line” (i.e. whether or not they itemize their deductions).

Businesses: This section would allow corporations to postpone estimated tax payments due after the date of enactment until October 15, 2020, without a cap on the amount of tax payments postponed, to provide cash flow necessary that would help businesses maintain operations & continue paying employees during the COVID-19 pandemic.


This section would create a limitation that an employer shouldn’t be required to pay more than $200 per day and $10,000 in the aggregate for each employee in paid family & medical leave. Additionally, employers wouldn’t be required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate to care for a quarantined individual or child for each employee in paid leave.

The Labor Dept. would have the authority to use regulation to expand the exemption for small businesses with fewer than 50 employees from paid leave provisions.

As I mentioned, the final version of this bill is still in flux. Hopefully we will receive updates soon.


Clark Boyd

Chief Operating Officer


PLEASE NOTE: This information is only a summary of what is included in the new legislation and resources available and should not be considered legal advice. If you are seeking to take action or contemplating action based on this information, please consult with a professional that will consider all relevant facts particular to your business.

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